#0058 - E-Commerce in Covid & Beyond

Confessions of a Recovering Landlord

Have you been to a grocery store in the last year and seen a store employee rushing around looking at a list and filling a basket? That's e-commerce in a brick-and-mortar store.

So, let's define e-commerce. Most people think they know, but never really stop to define it. It's really nothing more than ordering something on the internet and having it delivered to your home, office or wherever. The example used above of a e-shopper inside a brick-and-mortar would be a hybrid case. While the ordering was done online, the fulfillment is being done from a brick-and-mortar store and the groceries may be picked up by the customer or delivered to their house. So is that e-commerce or brick-and-mortar? It's both, really. But it has definitely changed retail and provided another option for how to shop.

120 years ago most people grew their own food because most people didn't live in cities. They could buy things through catalogs which had limited delivery available. They could order by mail or by phone if one was available. They could go to a store the next time they were in the nearest town. But that store had limited inventory/selection.

The industrial revolution started attracting people to cities and more people started buying from stores. Catalogs were still available, of course. Walmart's big innovation was their distribution system to towns large and small with stores much larger than the average retailer with far greater selection. That's why they were so successful.

The digital revolution created another way to order. Consumers can still pick up the item from the brick-and-mortar store, but they can also have it delivered to their home or office. What's fundamentally different in that scenario from the catalog days in 1892? The mechanism to order the products and the speed of delivery. And it's that last part that's the real story of e-commerce over the last 10-15 years. But mostly, in 2020.

E-commerce as a percentage of total retail sales was only 4% in 2010 and had risen to 11% in Q1, 2020, just before Covid hit. It peaked at 16% in Q3 of 2020, but has fallen back to 13% in Q1 in 2021 as brick-and-mortar retail has opened back up. All these numbers are per Statista.com.

How will all of this inventory be managed and stored in distribution centers going forward?